Michael Kors To Buy Jimmy Choo

Luxury apparel and accessory maker Michael Kors Holdings Ltd KORS confirmed early Tuesday morning it has agreed to buy the London-based and listed shoe company Jimmy Choo PLC.

As part of the agreement, Michael Kors will pay Jimmy Choo's shareholders 230 pence per share, which values the company at $1.350 billion. The deal has already been approved by the boards of directors of both companies.

Shares of Michael Kors were trading higher by more than 3 percent following the announcement.

Michael Kors was attracted to Jimmy Choo's successful but smaller global footprint of company-operated retail stores. The company has 560 multi-brand doors and more than 60 franchise stores across the world with a focus on the fast-growing market in Asia.

But Michael Kors believes its larger resources and superior global footprint could grow Jimmy Choo's sales to $1 billion a year. It also gives the company another venue to grow its luxury men's footwear category.

Investors shouldn't necessarily be surprised by the announcement. A July 15 report from Australia's Sky News said that Michael Kors was competing with a Chinese private equity firm called Hony Capital and European-based CVC Capital Partners to buy Jimmy Choo.

Related Link: Michael And Jimmy: A Budding Courtship In High-End Fashion?

Also, JAB Holding Company, a 70 percent owner of Jimmy Choo, said in April it will be looking to unload its stake to better focus on its growing portfolio of coffee products.

John D. Idol, chairman and CEO of Michael Kors, said: "We are pleased to announce the acquisition of Jimmy Choo, an iconic brand with a rich history as a leading global luxury house. Jimmy Choo is known worldwide for its glamorous and fashion-forward footwear. The company is a leader in setting fashion trends. Its innovative designs and exceptional craftsmanship resonate with trendsetters globally. We believe that Jimmy Choo is poised for meaningful growth in the future and our company is committed to supporting the strong brand equity that Jimmy Choo has built over the last 20 years."

Pierre Denis, CEO of Jimmy Choo, said: "It is a privilege for our management team to lead Jimmy Choo and to preside over such an exciting period for our company. We are convinced that there is so much more that can be delivered in the years ahead. We look forward to working closely with the leadership and team at Michael Kors Holdings Limited to further develop our iconic brand. Our two companies share the same vision of style and trend leadership. Our luxury heritage is the foundation of Jimmy Choo and we will continue to bring our brand vision to consumers globally."

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Image Credit: By Richalbertoa - Own work, CC BY-SA 3.0, via Wikimedia Commons